Fishing for sustainability

Fisheries create work for 180 million people and $500 billion a year in economic activity. They are under pressure.

As overfishing destabilizes marine ecosystems around the world, fisheries are finding themselves in rough waters. Data from the UN Food and Agriculture Organization (FAO) indicate that 30 percent of all fish stocks are now overexploited (beyond their maximum sustainable limits) and an additional 50 percent are fully exploited (at or close to those limits). Their erosion and eventual collapse would pose an economic threat not only to fishers but also to everyone else whose livelihood depends on fisheries, which (according to the FAO) provide employment for 180 million people and account for a significant part of the animal protein consumed globally, particularly in developing countries. With 2008 exports that some experts estimate at more than $85 billion, fish and fishery products rank among the most widely traded agricultural commodities in the world, in a value chain the FAO says may generate $500 billion a year.

A number of studies have shown that fisheries could make a significantly larger economic contribution if they were managed to their maximum sustainable yields. The World Bank puts the lost revenues at $51 billion a year; other estimates range from $46 billion to $90 billion. But though establishing sustainable fisheries is clearly desirable and necessary, only limited research has explored in detail the challenges of the transition, particularly the economic implications for different participants. A new McKinsey report, Design for Sustainable Fisheries—Modeling Fishery Economics, helps to fill these gaps.

The report finds that the transition to sustainable fisheries will be challenging for three main reasons. First, it typically requires a reduction in levels of fishing and changes in fishing practices, so short-term financial losses usually percolate through the value chain. Participants who lack alternatives or a longer-term interest in a fishery may be more concerned about losing short-term harvests than about driving a fishery to collapse. Second, even when a fishery becomes sustainable, the economic and other benefits may be unevenly distributed among participants. Finally, although sustainable fishing usually calls for data gathering and adequate management, in many areas these are hard to implement. Lacking good indications of a fish stock’s health, even people with the best intentions may overfish.

To help address these challenges, McKinsey collaborated with experts from the University of California Santa Barbara. The researchers devised a methodology to compare the biological and economic impacts of different transition pathways to sustainability for specific fisheries and applied it to three case studies. Detailed field research uncovered the problems of stakeholders and the value chain dynamics, and in-depth modeling explored the biological and economic consequences of various management scenarios. To highlight the significantly different possibilities, the researchers compared the consequences of a “business as usual” scenario with those of various paths to sustainability. This approach can help align the interests of different stakeholders and provide them with an optimal solution based on the study of detailed biological and economic scenarios.